The Changing Face of Small Business: New Challenges and Objectives
Small business in Russia has had a long history and has always been supported by the state
Small business has deep roots in our country, it began with merchant classes, artisans, developed fair trade. There were dynasties of merchants and industrialists. So the entrepreneurship has had a special status. The Russian state has always relied not only on large industrialists and merchants, but also on mass entrepreneurship. We can recall the manifesto on freedom of entrepreneurship by Catherine II of 1775; the guild reform of Alexander I, which gave all classes the right to open factories and plants; the Soviet Union law on cooperation in the USSR, which allowed cooperatives to engage in any types of activity that were not prohibited by the law. Now small businesses in our country account for 21% of the gross domestic product and provide over 20 million jobs — Alexander Kalinin, President, All-Russian Non-Governmental Organization of Small and Medium-Sized Businesses Opora Russia.
Small and large businesses have points of contact that help them grow
When I was invited to speak, I wondered if it was a mistake, because I am the head of the largest chain of convenience stores. We are widely known as killers of small and medium-sized businesses, so I would like to explain why I am here. <...> Both in Russia and globally people tend to pay more and more attention to the environment, to what they consume, and where these products come from. <...> In Magnit, we have already promoted the local agenda. When I started working in 2019, we made strategic decisions. <...> We decided to focus on local suppliers. <...> 50% of our supplies come from local small and medium-sized businesses. Of course, we spend quite a lot of resources to maintain such platform. For example, 71% of dairy products come from the local market, and 69% of bread — Jan Dunning, Chairman of the Management Board, President, Chief Executive Officer, Magnit.
Supporting small businesses helps the state to stabilize the economy
We pay a lot of attention to the development of small and medium-sized businesses. This is due to the fact that the Russian economy as a whole is quite cyclical being dependent on raw materials. Speaking about some important countercyclical measures, development of small and medium-sized businesses, especially in the service sector, and an increase in the share of small and medium-sized businesses in GDP, are probably among the most effective countercyclical measures. Even if you look at the German economy, this is a good example. <...> We are constantly working on improving tax regimes and various budget initiatives for small businesses — Alexey Sazanov, State Secretary – Deputy Minister of Finance of the Russian Federation.
Pandemic has had negative impact on small and medium-sized businesses, with services and trade heavily affected
2020 was a challenging year for small and medium-sized businesses. A significant part of service and trade sector was heavily affected <...> by pandemic restrictions. <...> In April 2020, the Small Business Optimism Index was at its lowest. These are the lowest indicators ever recorded. This is the first steep fall in expectations and sentiments of sales entrepreneurs in six years. And now, gradually, as the pandemic restrictions are being lifted, business activities are starting to recover. The good news is that the recovery in 2021 is faster than expected. We have recorded a positive PMI value for 4 consecutive months — Konstantin Basmanov, Head of Small and Medium Enterprises Unit, Promsvyazbank PJSC.
Ecosystems help small and medium-sized businesses with digitalization
In recent years, we have been actively involved in processes and provided support, because we felt such urge from the business. Within the group [Mail.ru, Ed.], we, our colleagues, our competitors, all IT people have a lot of tools that help go through the digitalization and store and process data. We can do that, we have skills, knowledge, expertise, and experience. <...> In recent years, the SME sector has been strongly encouraged to go through the digitalization process. <...> During the challenging year of pandemic, the number of entrepreneurs [according to VK Business platform, Ed.] grew by 33%, the investment increased by 40% compared to 2019. What does it mean? <...> There was a period when it was necessary to regroup and start acting in a different way. On the other hand, the entire sector was called to action and went online, where it was possible to find some kind of salvation by following the consumers — Elina Isagulova, Vice President for B2B Commerce and Operational Management, Mail.ru Group.
Timely legislative measures have supported the business during the pandemic
Increasing the number of employed people to 25 million by 2024 is one of the national goals outlined by President Vladimir Putin in the June decrees. During the pandemic we have faced a lot of challenges. Out of 5,900 [thousand, Ed.] companies that existed in the beginning of 2020, 1,100,000 have closed, 780,000 have opened, which means that, on the one hand, its number decreased by 260,000, but the timely measures by legislative and executive authorities <...> helped many people who lost their businesses become self-employed — Alexander Kalinin, President, All-Russian Non-Governmental Organization of Small and Medium-Sized Businesses Opora Russia.